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Using acquisitions to access multinational diversity: thinking beyond the domestic versus cross-border M&A comparison

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  • Jaideep Anand
  • Laurence Capron
  • Will Mitchell

Abstract

Prior research provides ambiguous results regarding the performance of international acquisitions. Drawing on a survey of 248 acquisitions, we find that acquirers enhance their capabilities when they buy a target with a multinational geographic scope. A financial event study uses a subsample of the acquisitions to show that the financial markets also value targets' multinational scope. Both surveys and stock market-based studies suggest that targets with access to heterogeneous resource environments provide the acquirer with greater potential for capability enhancement and financial performance. In contrast, simply acquiring firms across borders has less influence on post-acquisition outcomes. The study demonstrates greater value of the attributes of the target rather than of international expansion alone. Thus, the multinational scope of the target is more likely to account for the resource diversity provided by the target than the country of origin of the target per se. The study changes the emphasis on multinational acquisitions, by shifting the focus from foreign market expansion (country-level emphasis) to accessing geographically distributed resources that are embedded in target firms (firm-level emphasis). Copyright 2005, Oxford University Press.

Suggested Citation

  • Jaideep Anand & Laurence Capron & Will Mitchell, 2005. "Using acquisitions to access multinational diversity: thinking beyond the domestic versus cross-border M&A comparison," Industrial and Corporate Change, Oxford University Press, vol. 14(2), pages 191-224, April.
  • Handle: RePEc:oup:indcch:v:14:y:2005:i:2:p:191-224
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    1. repec:spr:manint:v:57:y:2017:i:3:d:10.1007_s11575-016-0287-6 is not listed on IDEAS
    2. Joseph A Clougherty & Michał Grajek, 2008. "The impact of ISO 9000 diffusion on trade and FDI: A new institutional analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(4), pages 613-633, June.
    3. Gómez-Plana, Antonio G. & Latorre, María C., 2014. "When multinationals leave: A CGE analysis of the impact of divestments," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-41.
    4. Deepak Dhayanithy, 2013. "What Drives Performance – Diversity, Selectivity, Experience Or Methodology?," Working papers 117, Indian Institute of Management Kozhikode.
    5. Brueller, Nir N. & Ellis, Shmuel & Segev, Eli & Carmeli, Abraham, 2015. "Knowing when to acquire: The case of multinational technology firms," International Business Review, Elsevier, vol. 24(1), pages 1-10.
    6. Olivier Bertrand & Laurence Capron, 2015. "Productivity enhancement at home via cross-border acquisitions: The roles of learning and contemporaneous domestic investments," Strategic Management Journal, Wiley Blackwell, vol. 36(5), pages 640-658, May.
    7. Lulu Gu & W. Robert Reed, 2011. "One For All or All For One? Using Multiple-listing Information in Event Studies," Working Papers in Economics 11/33, University of Canterbury, Department of Economics and Finance.
    8. Gu, Lulu & Reed, W. Robert, 2013. "Information asymmetry, market segmentation, and cross-listing: Implications for event study methodology," Journal of Asian Economics, Elsevier, vol. 28(C), pages 28-40.
    9. Colombo, Massimo G. & Rabbiosi, Larissa, 2014. "Technological similarity, post-acquisition R&D reorganization, and innovation performance in horizontal acquisitions," Research Policy, Elsevier, vol. 43(6), pages 1039-1054.

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